Germany and its economic standing
Germany is the largest and the most populous country in the European Union and it is one of the main political powers in the region. The country exists within its present borders from 1989 after the unification of the East and West parts of Germany. The population of Germany in July 2012 was 81,305,856 people, and 43.62 million (2011 estimate) belong to the labour force. In 2011 the country registered an unemployment rate of 6% according to the International Labor Organization, while Germany’s Federal Employment Agency reported an annual unemployment of 7.1% for 2011. Almost two thirds of people in the labor force in 2011 were employed in the service industry (73.8%), while only 24.6% and 1.6% were working in industry and agriculture respectively.
According to the U.S. Central Intelligence Agency, Germany is the biggest economy in Europe and the fifth-largest in the world if calculated in Purchasing Power Parity (PPP) terms ("World Factbook"). Its GDP for 2011 was estimated at $3.139 trillion in PPP, while per capita GDP in PPP was equal to $38,400. The main contributing sector in the Germany’s GDP is services segment with 70.6% share. It is followed by industry and agriculture with the contributions of 28.6% and 0.8% respectively. This shows a strong orientation of the economy towards developing their tertiary sector and the minor role that is played by agriculture. Taxes and other revenues represent 43.4% of GDP. Reuters reports that German economy has grown by 0.3% in the 2nd quarter of 2012 (Marsh, and Breidthardt). The inflation rate in 2011 based on consumer prices was estimated at 2.3% ("World Factbook").
In 2011 Germany has registered a trade surplus of 154.9 billion euro, as its exports and imports grew by 11.4% and 13.2% respectively. Germany’s mainly exports automobiles, machinery, plastics, agricultural products and foodstuffs, computer and electronic items, chemicals, pharmaceuticals, metals, rubber and transport equipment. The country imports mainly metals, chemicals, oil and gas, agricultural products and foodstuffs, machinery, vehicles, pharmaceuticals, as well as data processing and electronic equipment ("World Factbook").
The biggest concerns about the future of the German economy are related to the outlook for the European Union as a whole. As the strongest economy in the region, Germany is expected to be active in the rescue of some struggling EU economies, therefore it currently experiences a significant drop in investor confidence and suffers an increase in borrowing costs. Although the country is still rated as AAA by both S&P and Moody’s rating agencies, Moody’s has already changed the outlook for the country from stable to negative (Watts).
It is hard to predict the future of the German economy. On the one hand the economic fundamentals of the country are rather strong and the level of growth by far exceeds that of many major European economies. However, the indecisiveness of European politicians and the uncertainty about the future of the European Union can have drastic consequences for Germany. Moreover, recessions in the European countries, which are both the biggest exporters and importers for the German economy, may impede further development of the country. Therefore, the biggest challenge of the German economic development lies in its political strength and in the ability to address the current EU debt-crisis. Whether the solution would be a dissolution of the Union or a full support of the struggling countries, the decision should be made as soon as possible, since the uncertainty about the region’s future continues to a take toll on the otherwise healthy German economy.
References
Marsh, Sarah, and Annika Breidthardt. "UPDATE 2-German GDP growth slows, contraction
looms." UPDATE 2-German GDP growth slows, contraction looms. N.p., 14 August
2012. Web. 8 Oct 2012.
United States. Central Intelligence Agency. World Factbook. 2012. Web.
Watts, William L.. "S&P keeps stable outlook on German'ys AAA rating." Market Watch.
The Wall Street Journal, 02 August 2012. Web. 8 Oct 2012.
